The choices that you make with your CPF savings will have an impact on how much you have for retirement. Make informed financial decisions when you are younger for a worry-free retirement.
How to buy your first home?
Mortgage repayments should not exceed 30% of your monthly household income. When it comes to buying your first HDB flat, you will need to decide between taking an HDB loan or a Bank loan. Whichever you choose, consider making loan repayments in cash and CPF instead of CPF alone. This way, you can continue to earn risk-free interest on your Ordinary Account savings while building up a buffer for rainy days. For example, leaving $500 every month in your Ordinary Account over a 25-year loan period earns you additional interest of $58,000.
On CPF Housing Withdrawal limit, there is no cap for new HDB flat and resale HDB flat. There is a qualification for resale HDB flat, no cap only applies after setting aside current Basic Retirement Sum on reaching the Valuation Limit. For Bank Loan, for any type of property, it is capped at 120% of Valuation Limit after setting aside the current Basic Retirement Sum on reaching the Valuation Limit.
For interest rate on housing loan, HDB loan is fixed rate, pegged at 0.1% above the CPF Ordinary Account Interest Rate. Banks will have different rates for different mortgage plans.
For HDB loan, it is 10% down payment paid with CPF and/or cash. For Bank Loan, it is 20% down payment of which at least 5% must be paid in cash.
How to protect yourself against large hospital bills?
Try to understand your hospital coverage to ensure your hospitalization coverage to ensure that you are suitably covered for your choice of ward. By doing so, it can help to minimize your out-of-pocket expenses.
We all hope to live healthy lives but we ma need medical care at some point. if you are faced with your own or your loved ones’ healthcare expenses, you need not worry about paying for them.
You will receive up to 80% government subsidies in Type B2/C wards in public hospitals. Thereafter MediShield Life kicks in to help you pay for large hospital bills. If you wish to stay in Type A/B1 ward types in public hospitals or in private hospitals, you can utilize Integrated Shield Plans to provide additional coverage. You can then use your Medisave savings to defray the balance, up to the withdrawal limits.
How to build your retirement nest egg?
Use the rule of 72 to work out your retirement plan.
72 / (Interest Rate per Annum) = Years it takes to double your savings
Likewise if you substitute “interest rate per Annum” with “returns on investment”
72 / (Returns on Investment) = Years it takes to double your investment
You can earn risk-free interest of up to 5% per Annum with the compound interest earned on your CPF savings, every dollar in your Special Account will exponentially over 20 years to meet your retirement needs from age 65.
Time is your greatest asset. The earlier you start, the less you need to save each month to reach your financial goals. The good news is, with CPF, you have been saving for your retirement from the day you started working. The CPF savings you accumulate will provide you with monthly payouts to cover your basic needs in retirement for as long as you live. it pays to be prudent in how you use your CPF savings for your housing and healthcare needs as it will affect your retirement income.